Effect of Unemployment, Poverty and Government Expenditure on Economic Growth in Nigeria (1990 – 2017)

Abstract

This study examined the effect of unemployment, poverty and government expenditure on Economic growth during 1990 – 2017.The specific objectives are to determine how Youth Unemployment, poverty and Government expenditure affects economic growth. The gross domestic growth rate was used to capture the extent of economic growth and data on the variables were sourced from Central Bank of Nigeria. The methods of data analysis include descriptive statistics, Augumented Dickey-Fuller test for unit root and Autoregressive Distributed Lag (ARDL) bound test for cointegration amongst others. The unit root result test showed that the dependent variables youth unemployment, poverty and Federal government capital expenditure were stationary at first difference, while the independent variable real gross domestic product was stationary at level. The ARDL estimation test indicates indicates that Federal government capital expenditure have significant positive influence on Economic growth (RGDP). A unit increase in Federal government capital expenditure will result in a 2.368 units increase in Economic growth at lag 1. This implies capital expenditure induces economic growth. Poverty negatively influenced economic growth implying that a unit decrease in poverty (since from A priori expectation poverty is negatively signed) will lead to 32.13 unit increase in economic growth (RGDP) at lag 1. A unit decrease in unemployment will lead to a 694.2 unit increase in economic growth at lag 1. The F-statistic (1800) with probability value of (0.000) indicates that taken together, the explanatory variables are significantly related to economic growth (RGDP). The recommendation proffered based on the findings is that Monetary Policy measures should be put in place to curb youth unemployment and poverty in the country, through the provision of easily accessible funds to enable youths engage in meaningful production activities.

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